South Korea's consumers spend less.

Over the past decade, South Korea's per capita income has grown an estimated 60 percent. This estimate is derived from International Monetary Fund (IMF) statistics including the IMF's prediction that per capita income in 2005 will reach US$19,515. This puts the country's per capita income in the top 20 percent of the 232 countries tracked by the CIA's World Factbook.

From 1999 through 2002 South Korea's GDP (adjusted for price changes) grew an average of 7.2 percent. In 2004, South Korea joined the 10 other countries in the world with a trillion dollar economy.

In 1998 at the height of the Asian financial crisis, South Korea's economy contracted 6.9 percent under pressure from too much debt, problems in the banking sector, and high debt/equity ratios. The following year, GDP grew 9.5 percent.

Since 2002, however, South Korea's growth has not been able to match its mid-decade performance. In 2003, GDP grew 3.1 percent and in 2004 GDP grew 4.6 percent. The IMF expects GDP to grow 4 percent in 2005.

In spite of South Korea's hi-tech manufacturing prowess and its formidable competitive presence in world electronics markets, its economy is driven by consumer spending.

Consumer spending has slowed during the first half of 2005 largely because of lackluster growth in disposable income. According to the Korea Herald (Seoul) the purchasing power of South Korea's consumers grew at the slowest pace in six years. This from a June 11, 2005 story using statistics developed by the Bank of Korea (BOK), South Korea's central bank.

Blamed for sluggish disposable income were: Worsening trade terms, real losses in trade, and sharp increases in dividend payments paid to overseas investors.

The Herald story also quoted economists who expressed worry that the rise of the won against the dollar, and higher oil prices, could negatively affect exports, which have contributed to economic growth for the past two years.

Nonetheless, according to a separate story in the Herald (June 12, 2005), there has been no slowdown in the marketing of luxury goods to VIP buyers, the top 1 percent of the nation's consumers.

AN AGING POPULATION WILL CREATE BURDENS FOR THE ECONOMY

The population growth rate for South Korea is below the regional average, due in part to a birth rate of 10 per thousand inhabitants, which is lower than the average of 12 per thousand for East Asia. Job creation has kept up with growth of the labor force in recent years, and it is likely that the situation will improve further in 2005. Unemployment is running about 3.6 percent, and this keeps waning consumer confidence from slipping too far.

South Korea's population reached 48 million people mid-2004, which amounted to just over 3 percent of East Asia's 1.5-billion inhabitants. According to data released by the Population Reference Bureau (PRB), South Korea's population will reach 51-million by 2025. Also, according to that source, South Korea is going to have a population of 44-million people in 2050.

The PRB revealed that a substantial 80 percent of South Korea's population lived in urban areas during 2004, and that the country's population density is a comparatively high 1,258 people per square mile. South Korea is about the same size as Portugal but with over four times Portugal's 10.5-million population.

Another source of demographic data, the CIA's World Factbook, indicates that 19 percent of South Korea's population was birth to 14 years old in 2004, while 72 percent was 15 to 64 years old, and 9 percent of the populace was 65 years of age and over.

CIA statistics revealed that the country's population growth rate was 0.38 percent in 2004 and the net migration rate was zero.

According to the United Nations Population Division, in the year 2050, 17 percent of South Korea's population will be birth to 14 years old, while 50 percent will be aged 15 to 59, and 33 percent of the populace will be 60 years of age and over.